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Does a plan amendment to specify a time limit for a claim break preapproved treatment?


Peter Gulia
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A plan currently is stated using only the adoption agreement and other standard documents of a preapproved volume-submitter plan.

An employer would like to amend its plan to specify a time limit on a claim for a benefit - a provision not stated in the volume-submitter base plan, and not available as a choice in its adoption agreement.

If the employer makes the amendment, does doing so end its reliance on the volume-submitter IRS approval?

Or is there an argument that this added provision is "administrative" and so does not end reliance?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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IMHO, you would lose reliance. You might be able to get away with it by having it detailed in the SPD, if the plan language is silent or ambiguous on the time limit, but this seems like quite a stretch to me.

Is this because of the Heimeshoff v. Hartford Life & Accident Insurance Company decision? I was wondering about this myself, as to whether plans would be amending to put in a time limit, but since DC docs are in final stages of getting IRS approval, I don't see this as an option likley to be offered in the near future for pre-approved documents. Perhaps more for very large plans that are custom drafted anyway, or of course one could always amend the pre-approved plan and file for a d-letter - I don't know how important this item is for most employers.

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Thank you, Belgarath. Yes, it's about the Heimeshoff decision. After my client's general counsel read a litigation publication's summary of the Supremes' decision, she checked her company's health plan - finding it stated clear limits on bringing a lawsuit, and checked her retirement plan - finding it says nothing.

I doubt the idea of describing in the summary a provision not stated by the plan would be effective; the same Supreme Court has said that the summary is not the plan.

Even before posting this BenefitsLink inquiry, I advised that I could not state any comfort that the desired amendment would not take the plan "off-prototype", but that I am willing to write an objective memo on the strengths and weaknesses of the arguments for and against.

The general counsel decided that the user's fee and attorneys' fees for an IRS determination is a tiny price to pay to correct such an obvious defect in the retirement plan.

(By the way, the gc's decision-making could not have been affected by any interest that I might have had in generating work because she knew that my firm doesn't do qualified plans' documents or IRS-determinations work. It wouldn't even have any referral good-will value; the company regularly uses 18 law firms, and 13 of them have an employee-benefits department.)

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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If it is a retirement plan, what would it even mean to put a time limit on a claim for benefits? Nonforfeitable means that you cannot lose benefits you are entitled to just because you were slow to ask for them. The procedure in the olden days that put the burden on the participants to ask for their benefits is no longer tenable. The burden is on the plan administrator to find the participant and get the benefits into pay status on a timely basis.

Not sure how health plans work, but if someone (for example) were injured or sick and received treatment (that they paid out of pocket)

that fell under the plan's coverage rules, wouldn't they be entitled to reimbursement even if it took them a couple of years to ask for it? Retirement and health plans don't get to operate under the "must be present to win" rule.

This all presumes that it should seldom be necessary to resort to lawsuits to get what the plan promises, that the plan administrator will generally agree to pay if the requirements are met. A plan that is built around roadblocks (instead of reasonable procedures intended to limit payments to people who meet the requirements for those payments) doesn't deserve to have qualified status.

Always check with your actuary first!

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My 2 cents has a good observation about the nature of a pension benefit as involving some continuation.

But a limitations period that bars a civil action can be useful to make sure that a participant's, beneficiary's, or other claimant's lack of response after his or her claim is denied makes that denial not open to review in court.

To pick just one example, this can be helpful if a plan's administrator decided that a domestic-relations order is not a QDRO and the would-be alternate payee didn't promptly pursue that decision. If litigation comes later, the administrator can avoid unpleasant proceedings and expenses by getting a complaint dismissed on limitations grounds.

While a would-be alternate payee might return to the domestic-relations court, might get a revised order, and can require a plan's administrator to respond to the newly submitted order, pushing the proceedings and administration into that direction increases the opportunities to cause the participant and former spouse to get an order that is a QDRO and protects the plan and its administrator.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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